§ 70A-9a-320. Buyer of goods.

(1) Except as otherwise provided in Subsection (5), a buyer in ordinary course of business, other than a person buying farm products from a person engaged in farming operations, takes free of a security interest created by the buyer's seller, even if the security interest is perfected and the buyer knows of its existence.

(2) Except as otherwise provided in Subsection (5), a buyer of goods from a person who used or bought the goods for use primarily for personal, family, or household purposes takes free of a security interest, even if perfected, if the buyer buys:

(a) without knowledge of the security interest;

(b) for value;

(c) primarily for the buyer's personal, family, or household purposes; and

(d) before the filing of a financing statement covering the goods.

(3) To the extent that it affects the priority of a security interest over a buyer of goods under Subsection (2), the period of effectiveness of a filing made in the jurisdiction in which the seller is located is governed by Subsections 70A-9a-316(1) and (2).

(4) A buyer in ordinary course of business buying oil, gas, or other minerals at the wellhead or minehead or after extraction takes free of an interest arising out of an encumbrance.

(5) Subsections (1) and (2) do not affect a security interest in goods in the possession of the secured party under Section 70A-9a-313.

(6)

(a) Notwithstanding Subsection (1), a secured party may not enforce a security interest in farm products against a buyer, commission merchant, or selling agent who purchases or sells farm products in the ordinary course of business from or for a person engaged in farming operations unless the secured party has complied with the rules issued by the Division of Corporations and Commercial Code under Subsection (6)(b).

(b) The Division of Corporations and Commercial Code shall issue the rules necessary to implement a central filing system that will conform to the requirements of the Food Security Act of 1985, P.L. 99-198, as now enacted or as it may be hereafter amended.

Enacted by Chapter 252, 2000 General Session